Raising finance for your business

Raising Finance for your business

Sources of finance

There are many places that you can go to raise Finance for your business

Bank Overdrafts Bank Loans

InvestorsFriends & Family

Sources of finance

Bank Overdrafts

Advantages

-Short term financial support to get started -Getting money from the bank in this fashion is relatively fast

Downsides

-Can be expensive with high interest charges -Banks may require personal guarantees

-Interest rates may be variable so can fluctuate over time

Sources of finance

Bank Loans

Advantages

--Borrowing is for a longer period of time -The rate of interest can be fixed and you can forecast your repayments -Once paid back you still have full control & ownership over the business 

Sources of finance

Bank Loans

Downsides

-Can be expensive due to the levels of interest -Certain banks may wish to spend time with you to understand the business and request financial reports pulling you away from your customers -Banks may require personal guarantees

-Repayments are not usually flexible and will require you to pay a fixed amount of the agreed term -Loans may be secured against assets of the company and you could lose assets if loans are not repaid

Sources of finance

Investors

Advantages

-Investors may provide some support to you in the running of the business -Investors may take more risk and invest more into the business compared to banks

Downsides

-Investors may take some time to reach decisions about your business  -The cost of investors may be considerable if not by way of interest returns but by way of their ownership in the business. -Your decision making process may be slower if they need to be approved by the investors

Sources of finance

Friends & Family

Advantages

-There may not be such rigid ties to the administration of the borrowing compared to bank and investors -The arrangement of money may be quicker than other borrowing options. -Invariably the cost of borrowing will be cheaper than other arrangements

Sources of finance

Friends & Family

Downsides

-Unless agreed at the start the amount of interest or the time to repay the debt may be disputed -Debts between friends and family can affect relationships especially in troubled times. -The length and valuing of borrowing may not be stable as it depends on their circumstances not just yours.

How much do you need?Before you seek Finance be clear of how much money you need.

What type of costs should you consider?

Plant & Machinery Stock / products

Accountancy / tax costs

Office costs including furniture

Premises leases, refurbishment, rates,

utilities

Employee / recruitment costs

How much do you need?Before you seek Finance be clear of how much money you need.

What type of costs should you consider?

Advertisement / promotional costs

Web site / e-commerce

Legal costs: company formation, patents,

licences etc

Transportation

Stationery costsGraphic design /

business logos etc

Cash flow and profit forecast

Once you have established what your costs will be, plan when money will be spent.

Always add 20% of contingency costs as you may not be able to identify all the costs in a business plan

http://www.optimise-gb.com/business-templates

Cash flow and profit forecast

To ensure that you have covered all costs and accurately projected your revenues write a business plan…

See our web site for a free business plan template or purchase business writing software from:

http://www.optimise-gb.com/business-templates

Writing a business plan

For solutions

Contact Simon Misiewicz throughEmail: [email protected] or